Californian value sales soar globally and in the UK despite currency depreciation

By Jo Gilbert

Published: 15 February, 2017

US wine exports - 90% from California - reached a record $1.62 billion in winery revenues in 2016, driven by the global reach of premumisation.

The rise of up-spending across international markets has helped drive value growth for the US, as value sales outpace volume.

This is the case in the UK, which is California's second most valuable export market behind Canada.

Despite the buying power of the pound suffering a slump in the latter half of 2016, revenues to the UK rose to $337million, up from $284million from 2015.

This was a rise of 18%, compared to America's top-ranking market for value, Canada, where value sales were down 6% to $431million.

Globally, value exports rose by 1%.

The UK is also California's top export market globally for volume, with shipments to UK ports exceeding 13 million 9-liter cases.

"Volumes to the UK are up 5% while value is up 18%. Some of this may be due to increased pricing courtesy of USD strength against the pound, but it is a very healthy sign that UK consumers are willing to pay more for better quality Californian wine," said the California Wine Institute UK's trade director Justin Knock.

"That is premiumisation in action."

He added: "It's a fantastic result for California wine in the UK, continuing three years of accelerating growth. The conversation is increasingly about exceptional wine quality from California across both powerful and elegant styles."

With volumes and value on the rise, Californian wine is now on track to reach $400 million in export sales to the UK by the end of the decade.

Globally, US volumes reached 412.7 million litres or 45.9 million cases in 2016.

Led by the uptake in the UK, the EU's 28-member countries is the top overall export market for California, accounting for $685 million.

The EU bloc is followed by Canada, $431 million; Hong Kong, $99 million; Japan, $87 million; China, $82 million; Mexico, $24 million; South Korea, $23 million; Switzerland, $19 million; and Singapore, $14 million.

Trade agreements, such as the North American Free Trade Agreement (NAFTA), have helped to dramatically grow US wine exports.

But the US still faces "discriminatory non-tariff trade barriers" by foreign governments.

"California wine exports have grown 78% by value in the last decade despite heavily-subsidised foreign competitors and high tariffs," Wine Institute vice president of international marketing, Linsey Gallagher added.

"Our global trading partners are increasingly acknowledging the high quality of wine from the Golden State and responding to our California Wines marketing efforts throughout the world."

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